Hedge funds and other money managers held a net long position equivalent to 883 million barrels in the five biggest futures and options contracts linked to petroleum on Oct. 17.

The net position had been reduced by 6 million barrels compared with the previous week and 45 million barrels from the recent peak on Sept. 26.

But it was 578 million barrels higher than at the end of June and still near this year’s peaks, according to records published by regulators and exchanges.

Fund managers made comparatively minor adjustments to their positions in Brent, U.S. gasoline and U.S. heating oil in the week to Oct. 17, with few signs of profit-taking.

Significant short-selling emerged, however, in U.S. crude, where portfolio managers added 23 million barrels of fresh short positions.

Funds have embarked on a new cycle of short selling, the tenth since the start of 2015, with short positions up by 40 million barrels since Sept. 26.

But the current cycle is unusual in that prices have risen over the last two weeks, even as funds added 35 million barrels of new short positions.

The combination of rising prices with a new wave of short selling indicates U.S. crude prices may be moving into a new, higher trading range.

From a pure positioning perspective, the concentration of long positions among hedge funds continues to pose a downside risk to oil prices if fund managers attempt to realise some of their profits before the year-end.

But a move into a higher range would be consistent with the emerging fundamental picture, with U.S. oil drilling slowing, crude stocks falling, and consumption of refined fuels at home and in export markets increasing strongly.